The national income of a country describes the total factor earnings from a country’s current production of goods and services. Statistically, the U.S average national income amounted to 4.7% in January 2012 as compared to 3.7% in December 2011. On the other hand, the U.S average national disposable income amounted to 3.4% in January 2012 compared to 3.6% in December 2011.
The average national consumer expenditure was estimated at 4.7% in January 2012 compared with 3.6% in December 2011 (U.S. Department of Commerce, 2012). In summary, according to the Bureau of Economic Analysis, the average national income increased by $61.3 billion, or 0.6%, and the disposable average national income increased by 47.1 billion or 0.4% in January 2012.
In December 2011, the average national consumption expenditure increased by $7.4 billion or 0.1%; average national disposable income decreased by $4.1 billion, or less than 0.1%; and average national consumption expenditure increased by $11.4 billion, or 0.1%, as reflected on revised estimates (U.S. Department of Commerce, 2012).
Factors Affecting the Average National Income
One of the significant factors affecting the current average income is- factors of production. According to Mishkin (2010), the richer and efficient the resources of a country is, the higher the average national income level or Gross National Product.
Some of the major factors of production that affects average national income includes, land, capital, entrepreneur, and labor. Land combine resources like iron, coal, and timber which are very essential for heavy industries. The geographical location of these natural resources influences the gross national product which is used for the calculation of average notational income.
Capital is highly determined by level of investment which in turn may increase or reduce the level of average national income. Labor and entrepreneur affect the productivity or quality of human resources. As such, education and manpower planning often influence the productivity and production capacity of a country’s economic income (U.S. Department of Commerce, 2012).
Other important factors affecting average national income are: technology, government, and political stability. Usually, technological development affects the level of innovation and invention on production and may lead to an increase in average national income of a country (Mishkin, 2010).
Government can also help in creating a business environment that is favorable for investment. This will boost trade and other economic activities hence increasing average national income. Similarly, favorable or stable political and economic system enables allocation of resources, encourage investment, and business activities which in turn boosts a country’s average national income (Mishkin, 2010).
U.S Current Unemployment Rate
According to US Bureau of Labor Statistics, the preliminary estimates released showed that the current seasonally unemployment rate adjustment for January 2012 went down to 8.3% from 9.1% in January, 2010 (U.S. Department of Labor, 2012).
Generally, the seasonal unemployment adjustment numbers appeared to be steadily decreasing from September, 2011 when the figure was 9% to 8.3% in January 2012, with the actual number of people who had jobs in January standing at 130.263 million people compared to 133.746 million people in September, 2011.
This implies that about 1.5 million people were unemployed in January than in September, and almost 2.5 million less people were working in January than in November 2011 (U.S. Department of Labor, 2012).
Generally, from each year’s November to January of the subsequent year, the US unemployment rates drops since seasonal employees are picked by stores for Christmas season and inventory year-end. As expected, the number of unemployed individuals decreased to 12.8 million in January, 2012 and the number of those who lost jobs as well as the number of people who completed temporary jobs declined to 12.8 million(U.S. Department of Labor, 2012).
The number of persons with long-term unemployment record was charged at 5.5 million, accounting for 42.8% of the unemployed persons. Nevertheless, January, 2012 saw significant change in the government employment rates as compared to the last 12 months. About 277,000 jobs were lost due to the decline in state government, local government, education, and the postal service jobs (U.S. Department of Labor, 2012).
Factors Affecting Unemployment Rate
Factors that affect unemployment rates can be categorized into three major categories: frictional, cyclical, and structural unemployment. Frictional unemployment is a type of unemployment which happens as a result of mobility of labor, especially when workers wait to start new jobs or change job (Mishkin, 2010).
Because jobs searches by employees and respective correspondence by employers often take time on any particular day in the market economy, a gap between people who are looking for jobs and those waiting to begin jobs is created. This may affect a country’s unemployment rate.
Cyclical unemployment occurs when an economy is experiencing recession. The major causes of this type of unemployment are decline in level of investment, consumption, government expenditure in the economy, or decrease in demand of services and goods exported to other countries.
As a result of reduction in national production and spending level falls, some employees are laid off by their respective employers (U.S. Department of Labor, 2012). In fact, some of the highest unemployment rates experienced in US economy have been as a result of economic rescission.
On the other hand, structural unemployment occurs when people are seeking for jobs yet they have no skills or education to fill the jobs that may be currently available. The policies developed to deal with structural unemployment only provide training programs for the workers, or subsidized education, and training programs available to only universities and colleges, businesses, or technical schools. Such trends may often give a bigger figure of unemployment rate in a country (U.S. Department of Labor, 2012).
Inflation Rate
Inflation is the general rise in commodity prices measured against the purchasing power standard level or increase of money supply in the economy (Mishkin, 2010). In US, the consumer price index over the last 12 months in all urban consumers amplified to 3.0% before the seasonal adjustment (U.S. Census Bureau, 2012).
Generally, the energy index indicated a decrease in December, 2011, counterbalancing increases in other indexes. For instance, the index for gasoline as well as household goods declined for three months in a row. However, the general food index increased in December, 2011 after a considerable decline in the previous months. With the exemption of energy and food, indices for different items increased by 0.1% in January 2012 after rising by 0.2 in December 2011 (U.S. Census Bureau, 2012).
Medical care, tobacco shelter, and recreation indices all indicated an increase, with trucks and cars, apparel, and new vehicles indices registering significant decline (U.S. Census Bureau, 2012).
Generally, in the previous months (from December 2010), consumer index changes in various items with exception of energy and food, were estimated at 2.3 percent, while change in food index over the last s edged up to 4.7 percent from 4.6 percent. Therefore, based on the US bureau of labor statistics reported on January, 2012, the current US inflation rate stands at 3.0% (U.S. Census Bureau, 2012).
Factors Affecting Inflation
Demand of the commodities is one of the significant that affects inflation. High demand of goods often results into inflation especially in the situation where the there is aggregate increase in demand for resources either from households or entrepreneurs or government (Mishkin, 2010). This may result into pressure of demand that may not be met by the current aggregate supply available in the economy hence generating inflationary pressure in the economy.
Another significant factor that may affect inflation is the cost of products. This occurs in a situation where even if there is no aggregate increase in demand, there may be a rise in prices, due to increase in costs especially wage cost (Mishkin, 2010). Structural change in the economy may also contribute to inflation: change in the structure of economy my give rise to price increases thus generating pressure of inflation (Mishkin, 2010).
References
Mishkin, F. S. (2010). The economics of money, banking & financial markets. Boston: Addison-Wesley.
U.S. Census Bureau. (2012). The 2012 Statistical Abstract. Web.
U.S. Department of Labor. (2012). Bureau of Labor Statistics. Web.
U.S. Department of Commerce. (2012). Bureau of Economic Analysis. Web.